Difference between terms liquidity, solvency and liquidity of assets

Last updated: 25.03.2016

There is a difference between the related terms of liquidity, solvency and liquidity of assets.

 

Liquidity

Liquidity is the entity´s ability to convert its assets into cash for the purpose to settle its obligations, ideally with the lowest possible transaction costs. (14) More here.

 

Liquidity of assets

Liquidity of assets is the ability to convert assets into cash with the lowest transaction costs possible. (14) More here.

 

Solvency

Solvency is the ability to pay the obligations on time. (14) More here.

 

Liquid assets 

Liquid assets are current assets that will or could be converted into cash in a short period of time. More here.



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